Electrical Marketing's Leading Indicators

PMI increases in October

Manufacturing continued to grow in October and at an accelerated rate, as the Purchasing Managers Index (PMI) registered 56.9 percent, an increase of 2.5 percentage points when compared to September's reading of 54.4 percent. A reading above 50 percent indicates the manufacturing economy is generally expanding; below 50 percent indicates it's generally contracting.

Freight-car loadings up 7.3 percent in early November

One of Warren Buffett's favorite economic indicators, the amount of material being shipped by railroads, continued improving during the week ending Nov. 6. The Association of American Railroads (AAR), Washington, D.C., publishes a weekly report on the subject and it said weekly rail traffic continues to see modest year-over-year gains, with U.S. railroads originated 288,056 carloads for the week ending Nov. 6, 2010, up 4.9 percent compared with the same week last year. For the first 44 weeks of 2010, U.S. railroads reported cumulative volume of 12,612,717 carloads, up 7.3 percent from last year.

Truck tonnage increases 1.7 percent in September

Another one of Warren Buffett's favorite economic indicators is the amount of freight that trucks are hauling. The American Trucking Associations (ATA), Arlington, Va., measures this with its For-Hire Truck Tonnage Index. This index increased 1.7 percent in September after falling a revised 2.8 percent in August. The latest gain put the index at 108.7 in September, up from 106.9 in August. Compared with September 2009, tonnage climbed 5.1 percent, which was well above August's 2.9 percent year-over-year gain. Year-to-date, tonnage is up 6.1 percent compared with the same period in 2009.

ATA Chief Economist Bob Costello said that truck tonnage over the last few months fits with an economy that is growing very slowly. “While tonnage grew in September, truck freight volumes leveled off over the summer and early autumn. This is a reflection of an economy that is barely growing.”

Costello noted again this month that the trucking industry is significantly smaller than it was prior to the recession, but as a result, is better equipped to deal with slower than normal tonnage growth.

The Marketplace: Key Figures

MonthLatest
monthPrevious
monthMonth
-over-month
% changeYear
agoYear
-over-year
% change2009
annualCONSTRUCTION New Construction Put in Place (billions of dollars, SAAR)² Total SEP 801.75 797.46 0.5 894.84 -10.4 907.63 Offices SEP 22.69 22.7 0 33.39 -32 38.05 Industrial SEP 35.52 37.3 -4.8 56.21 -36.8 58.15 Housing Starts OCT 519 588 -11.7 529 -1.9 554 Single-unit OCT 436 441 -1.1 475 -8.2 442 Mobile Homes SEP 47 50 -6 48 -2.1 50 Employment, Construction OCT 5,854 5,848 0.1 5,998 -2.4 6,037 Employment, electrical SEP 762.2 773.1 -1.4 788.8 -3.4 795.8 Hourly Wage SEP 25.24 25.33 -0.4 24.39 3.5 24.76 PRODUCTION Industrial Production Index (1967=100)⁵ OCT 93.4 93.4 0 88.6 5.3 87.7 Construction Supplies Production Index⁵ OCT 79.4 79.3 0.2 73.8 7.7 75.4 Employment, in Electrical Equipment & Supplies Mfg. Production Workers (Thousands)4 SEP 144.5 144.3 0.1 144.4 0.1 146.7 Weekly Hours SEP 42.2 42.1 0.2 39 8.2 39.6 Hourly Wage SEP 16.42 16.66 -1.4 16.62 -1.2 16.11 Electrical Power Output Index (1967=100)⁵ OCT 95.9 99.2 -3.3 96.2 -0.3 96.8 Machine Tool Orders* (Millions of dollars)² SEP 364.18 228.69 59.2 134.88 170 Industrial Capacity Utilization (Percent, SA)¹ OCT 73 72.61 0.4 68.2 4.8 67.04 TRADE Elec. Mfr. Shipments (Millions of dollars)² SEP 3,221 3,247 -0.8 2,750 17.1 Elec. Mfr. Inventories (Millions of dollars)² SEP 4,827 4,753 1.6 4,200 14.9 4,475 Elec. Mfr. I/S Ratio SEP 1.499 1.464 2.4 1.527 -1.9 1.596 Elec. Mfr. New Orders (Millions of dollars)² SEP 3,219 3,487 -7.7 2,635 22.2 Elec. Mfr. Unfilled Orders (Millions of dollars)² SEP 15,685 15,687 0 13,886 13 14,253 Exports, Electrical Machinery (f.a.s. millions of dollars)² SEP 6,588 6,551 0.6 5,743 14.7 63,949 U.S. Dollar vs. Other Major Currencies (1973=100)⁵ OCT 98.9 101.6 -2.6 101 -2 105.6 PRICES & INTEREST RATES Industrial Commodities Wholesale Price Index (Bureau of Labor Statistics, 1967=100) OCT 188.7 187 0.9 177.8 6.1 174.9 Electrical Price Index (Electrical Marketing, 1997=100) OCT 140.3 138.8 1.1 135.4 3.6 133.1 Construction Materials Wholesale Price Index (Bureau of Labor Statistics, 1982=100) OCT 205.8 205.7 0 201.9 1.9 202.9 Copper Price (Metals Week, cents per pound) NOV 393.61 381.31 3.2 307.53 28 239.28 Prime Rate⁵ OCT 3.3 3.3 0 3.3 0 3.3 Federal Funds Rate⁵ OCT 0.2 0.2 0 0.1 0.1 0.2 Mortgage Rate⁷ OCT 4.2 4.4 -0.1 5 -0.7 5

*Several series related to employment are now being reported on a NAICS basis. Because of this change, some numbers are not directly comparable to previously reported data, but are consistent in year-over-year comparisons and comparisons shown in the table.

Sources: ¹McGraw-Hill Construction/Dodge; ²Dept. of Commerce; ³Manufactured Housing Institute; ⁴Dept. of Labor; ⁵Federal Reserve Board; ⁶The Association for Manufacturing Technology; ⁷Federal Home Loan Bank Board.

Note: Some figures shown — prime rate, for example — are averaged for month. NYA — not yet available

SA-seasonally adjusted. SAAR-seasonally adjusted annual rate. Source for chart: Global Insight.

For further information about construction starts, please contact Dodge Analytics at 1-800-591-4462